經(jīng)濟學(xué)Chap001國際財務(wù)管理-英文第五版課件

1、Globalization and the Multinational FirmChapter OneGlobalization and the MultinaWhats Special about “International” Finance?Goals for International Financial ManagementGlobalization of the World EconomyMultinational CorporationsOrganization of the TextSummaryChapter One OutlineWhats Special about “I

2、nternatWhats Special about “International” Finance?Foreign Exchange RiskPolitical RiskMarket ImperfectionsExpanded Opportunity SetWhats Special about “InternaWhats Special about “International” Finance?Foreign Exchange RiskThis is risk that foreign currency profits may evaporate in dollar terms due

3、to unanticipated unfavorable exchange rate movements.Suppose $1 = 100 and you buy 10 shares of Toyota at 10,000 per share. One year later the investment is worth ten percent more in yen: 110,000. But, if the yen has depreciated to $1 = 120, your investment has actually lost money in dollar terms.Wha

4、ts Special about “InternaWhats Special about “International” Finance?Political RiskSovereign governments have the right to regulate the movement of goods, capital, and people across their borders. These laws sometimes change in unexpected ways.Whats Special about “InternaMarket ImperfectionsLegal re

5、strictions on the movement of goods, people, and moneyTransactions costsShipping costsTax arbitrageWhats Special about “International” Finance?Whats Special about “InternaThe Example of Nestls Market ImperfectionNestl used to issue two different classes of common stock bearer shares and registered s

6、hares.Foreigners were only allowed to buy bearer shares.Swiss citizens could buy registered shares.The bearer stock was more expensive.On November 18, 1988, Nestl lifted restrictions imposed on foreigners, allowing them to hold registered shares as well as bearer shares.The Example of Nestls MarketN

7、estls Foreign Ownership Restrictions12,00010,0008,0006,0004,0002,000011203191824Source: Financial Times, November 26, 1988 p.1. Adapted with permission.SFBearer shareRegistered shareNestls Foreign Ownership ResThe Example of Nestls Market ImperfectionFollowing this, the price spread between the two

8、types of shares narrowed dramatically.This implies that there was a major transfer of wealth from foreign shareholders to Swiss shareholders.Foreigners holding Nestl bearer shares were exposed to political risk in a country that is widely viewed as a haven from such risk.The Nestl episode illustrate

9、s both the importance of considering market imperfections and the peril of political risk.The Example of Nestls MarketExpanded Opportunity SetIt doesnt make sense to play in only one corner of the sandbox.True for corporations as well as individual investors.Whats Special about “International” Finan

10、ce?Whats Special about “InternaThe focus of the text is to equip the reader with the “intellectual toolbox” of an effective global managerbut what goal should this effective global manager be working toward?Maximization of shareholder wealth?orOther goals?Goals for International Financial Management

11、The focus of the text is to eqMaximize Shareholder WealthLong accepted as a goal in the Anglo-Saxon countries, but complications arise.Who are and where are the shareholders?In what currency should we maximize their wealth?Maximize Shareholder WealthLonOther GoalsIn other countries shareholders are

12、viewed as merely one among many “stakeholders” of the firm including:EmployeesSuppliersCustomersIn Japan, managers have typically sought to maximize the value of the keiretsua family of firms to which the individual firms belongs.Other GoalsIn other countries Other GoalsAs shown by a series of recen

13、t corporate scandals at companies like Enron, WorldCom, and Global Crossing, managers may pursue their own private interests at the expense of shareholders when they are not closely monitored.These calamities have painfully reinforced the importance of corporate governance, i.e., the financial and l

14、egal framework for regulating the relationship between a firms management and its shareholders.Other GoalsAs shown by a serieOther GoalsThese types of issues can be much more serious in many other parts of the world, especially emerging and transitional economies, such as Indonesia, Korea, and Russi

15、a, where legal protection of shareholders is weak or virtually non-existing.No matter what the other goals, they cannot be achieved in the long term if the maximization of shareholder wealth is not given due consideration.Other GoalsThese types of issuGlobalization of the World Economy: Major Trends

16、 and DevelopmentsEmergence of Globalized Financial MarketsEmergence of the Euro as a Global CurrencyEuropes Sovereign Debt Crisis of 2010Trade Liberalization and Economic Integration Privatization Global Financial Crisis of 2008-2009Globalization of the World EcDeregulation of Financial Marketscoupl

17、ed withAdvances in Technologyhave greatly reduced information and transaction costs, which has led to:Financial Innovations, such asCurrency futures and optionsMulti-currency bondsCross-border stock listingsInternational mutual fundsEmergence of Globalized Financial MarketsDeregulation of Financial

18、MarkEmergence of the Euro as a Global CurrencyA momentous event in the history of world financial systems.Currently more than 300 million Europeans in 16 countries are using the common currency on a daily basis.In May 2004, 10 more countries joined the European Union.The “transaction domain” of the

19、euro may become larger than the U.S. dollars in the near future.Emergence of the Euro as a GloEuro AreaAustria BelgiumCyprusFinlandFranceGermany GreeceIrelandItalyLuxembourg Malta The NetherlandsPortugal Slovenia SlovakiaSpainEuro AreaAustria IrelandValue of the Euro in U.S. DollarsValue of the Euro

20、 in U.S. DollEuropes Sovereign-Debt Crisis of 2010In December of 2009 the new Greek government revealed that its budget deficit for the year would be 12.7% of GDP, not the 3.7% forecast.Investors sold off Greek government bonds and the ratings agencies downgraded them to “junk.”While Greece represen

21、ts only 2.5% of euro-zone GDP, the crisis became a Europe-wide debt crisis.The challenge remains that fiscal indiscipline of one euro-zone country can escalate to a Europe-wide crisis.Europes Sovereign-Debt CrisisThe Greek DramaGreece paid no premium above the German rate until late fall 2009.The Gr

22、eek interest rate rose until the bailout package on May 9.The Greek DramaGreece paid no Economic IntegrationOver the past 50 years, international trade increased about twice as fast as world GDP.There has been a change in the attitudes of many of the worlds governments, who have abandoned mercantili

23、st views and embraced free trade as the surest route to prosperity for their citizenry.Economic IntegrationOver the pLiberalization of Protectionist LegislationThe General Agreement on Tariffs and Trade (GATT) is a multilateral agreement among member countries that has reduced many barriers to trade

24、.The World Trade Organization has the power to enforce the rules of international trade.On January 1, 2005, the era of quotas on imported textiles ended.This is an event of historic proportions.Liberalization of ProtectionisNAFTAThe North American Free Trade Agreement (NAFTA) calls for phasing out i

25、mpediments to trade between Canada, Mexico, and the United States over a 15-year period beginning in 1994.For Mexico, the ratio of export to GDP has increased dramatically from 2.2% in 1973 to 29% in 2006.The increased trade has resulted in increased numbers of jobs and a higher standard of living f

26、or all member nations.NAFTAThe North American Free TPrivatizationThe selling of state-run enterprises to investors is also known as “denationalization.”Privatization is often seen in socialist economies in transition to market economies.By most estimates, this increases the efficiency of the enterpr

27、ise.It also often spurs a tremendous increase in cross-border investment.PrivatizationThe selling of sChinese PrivatizationState-owned enterprises have been listed on organized stock exchanges.More than 1,500 companies are currently listed on Chinas stock exchanges.The Chinese government still retai

28、ns the majority stakes in most public firms.Chinese citizens can buy “A” shares, while foreigners are limited to “B” shares.Chinese PrivatizationState-ownGlobal Financial Crisis of 20082009 The “Great Recession” was the most serious, synchronized economic downturn since the Great Depression of the 1

29、930s.Factors included:Households and financial institutions borrowed too much and took too much risk.This risk was repackaged with securitization, and so defaults on subprime mortgages in the U.S. came to threaten the solvency of a teachers retirement plans in Norway.Global Financial Crisis of 200Gl

30、obal Financial Crisis 20082009 During the course of the crisis, the G-20 emerged as the premier forum for discussing international economic issues and coordinating financial regulations and macroeconomic policies. Global Financial Crisis 20082Multinational Corporations A multinational corporation (M

31、NC) is a firm that has been incorporated in one country and has production and sales operations in other countries.There are about 60,000 MNCs in the world.Many MNCs obtain raw materials from one nation, financial capital from another, produce goods with labor and capital equipment in a third countr

32、y, and sell their output in various other national markets.Multinational Corporations A Top 10 MNCs1General ElectricUnited States2Royal Dutch/Shell GroupUK/Netherlands3Vodafone Group PLCUnited Kingdom4British Petroleum Co. PLCUnited Kingdom5Toyota Motor CorporationJapan6ExxonMobile CorporationUnited

33、 States7TotalFrance8E.ON AGGermany9Electricit De FranceFrance10ArcelorMittalLuxembourgTop 10 MNCs1General ElectricUnThe following slides cover the appendix to Chapter 1. The following slides cover theA comparative advantage exists when one party can produce a good or service at a lower opportunity c

34、ost than another party.The opportunity cost of making one additional unit of a good (or service) can be defined as the value of some other good that you have to give up in order to produce this additional unit.For example, if you can work as many hours as you like at your current employer and get pa

35、id $10 per hour, then the opportunity cost of your leisure is $10 per hour.The Theory of Comparative AdvantageA comparative advantage existsThe Geometry of Comparative AdvantageConsider the example where there are two countries, A and B, who can each produce only food and textiles.Initially they do

36、not trade with one another.The graph on the next slide shows the increase in consumption available to the citizens of countries A and B with trade arising from the differences in their opportunity costs of production.The Geometry of Comparative Ad300FoodTextiles 18060200As a practical matter, the ci

37、tizens of Country A must choose a point along their production possibilities curve.Suppose they initially choose 200m pounds of food and 60m yards of textiles.A production possibilities curve shows quantities of food or textiles each country can make.The production possibilities of Country A are suc

38、h that if they concentrated 100% of their resources into the production of textiles, they could produce 180 million yards of textiles.If Country A chose to concentrate 100% of their resources into the production of food, they could produce as much as 300 million pounds of food. Country A can produce

39、 any combination of food and textiles between these two points.The Geometry of Comparative Advantage300FoodTextiles 18060200As a p1,200300FoodTextiles 18090024060200600The citizens of Country B must also choose a point along their production possibilities curve; 80If Country B chose to concentrate 1

40、00% of their resources into the production of textiles, they could produce 240 million yards of textiles.If Country B chose to concentrate 100% of their resources into the production of food, they could produce 900 million pounds of food. The Geometry of Comparative AdvantageInitially they choose 60

41、0 million pounds of food, and 80 million yards of textiles.1,200300FoodTextiles 180900240300FoodTextiles 1809002406020060080Country A enjoys a comparative advantage in textiles because they have to give up food at a lower rate than B when making textiles.Put another way, country B enjoys a comparati

42、ve advantage in food because they have to give up textiles at a lower rate than A when making more food.Geometrically, a comparative advantage exists because the slopes of the production possibilities differ.If the countries specialize according to their comparative advantage, then Country A should

43、make textiles and trade for food, while Country B should grow food and trade for textiles.The Geometry of Comparative Advantage300FoodTextiles 180900240602001,200300FoodTextiles 4208001809002406020060080Before trade, combined consumption is 800 million lbs of food (= 200 + 600) and 140 million yards

44、 of textiles (= 60 + 80).140The combined production possibilities curve of country A and B without trade are shown in the green line.Without trade, if both countries make only food, the combined production would be 1,200 million pounds of food = 900 + 300.Without trade, if both countries make only t

45、extiles, the combined production would be 420 million yards of textiles = 240 + 180.The Geometry of Comparative Advantage1,200300FoodTextiles 420800180300FoodTextiles 18060200As a practical matter, the citizens of country A must choose a point along their production possibilities curveSuppose that i

46、nitially they choose 200 million pounds of food, and 60 million yards of textiles.A production possibilities curve shows the various amounts of food or textiles that each country can make.The production possibilities of country A are such that if they concentrated 100% of their resources into the pr

47、oduction of textiles, they could produce 180 million yards of textiles.If country A chose to concentrate 100% of their resources into the production of food, they could produce as much as 300 million pounds of food. Country A can produce any combination of food and textiles between these two points.

48、1,200300FoodTextiles 18090024060200600The citizens of country B must also choose a point along their production possibilities curve; initially they choose 600 million pounds of food, and 80 million yards of textiles.80If country B chose to concentrate 100% of their resources into the production of t

49、extiles, they could produce 240 million yards of textiles.If country B chose to concentrate 100% of their resources into the production of food, they could produce 900 million pounds of food. 300FoodTextiles 1809002406020060080Country A enjoys a comparative advantage in textiles because they have to give up food at a lower rate than B when making textiles.Put another way, country B enjoys a comparative advantage in food because they have to give up textiles at a lower rate than